10. For this problem, assume that Joe has $80 to spend on booksand movies each month and that both goods must be purchasedwhole (no fractional units). Movies cost $8 each, and books cost$20 each. Joe's preferences for movies and books are summa-rized by the following information:MOVIESВОOKSNO. PERNO. PERΜΟΝΤΉTUMUMU/$_MONTHTUMUMU/$150122804231003524110457116560121627123763a. Fill in the figures for marginal utility and marginal utility perdollar for both movies and books.b. Are these preferences consistent with the law of diminishingmarginal utility? Explain briefly.c. Given the budget of $80, what quantity of books and whatquantity of movies will maximize Joe's level of satisfaction?Explain briefly.

Marginal utility is unit of satisfaction that an individual gain by consumption of an additional…

. For this problem, assume that Joe has $80 to spend on books and movies each month and that both goods must be purchased whole (no fractional units). Movies cost $8 each, and books cost $20 each. Joe's preferences for movies and books are summa- rized by the following information:

. For this problem, assume that Joe has $80 to spend on books and movies each month and that both goods must be purchased whole (no fractional units). Movies cost $8 each, and books cost $20 each. Joe's preferences for movies and books are summa- rized by the following information:

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Consumer Choice Theory

Section: Chapter Questions

Problem 3SQP

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Bottles of water sell for 1 euro and slices of chocolate cake sells for 3 euros. Suppose Jack, whose preferences satisfy all of the basic assumptions of consumer choice theory, buys 5 bottles of water and one slice of chocolate cake every day. At this consumption bundle, his MRS of bottles of water for slices of chocolate cake is 3 (i.e. he is willing to give up 3 bottles of water to get an additional slice of cake). Which of the following is true? (Hint: draw this situation with bottles of water on the vertical axis and slices of cake on the horizonal axis). A. Jack could increase his utility by buying fewer bottles of water and more slices of cake. B. Jack could increase his utility by buying more bottles of water and less chocolate cake. C. Jack could not increase his utility because it is already at a maximum level. D. Jack could increase his utility by buying more bottles of water and more chocolate cake.
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For this problem, assume that Joe has $80 to spend on books and movies each month and that both goods must be purchased whole (no fractional units). Movies cost $8 each, and books cost $20 each. Joe’s preferences for movies and books are summarized by the following information: MOVIES BOOKS NO. PER MONTH TU MU MU/S NO. PER MONTH TU MU MU/S 1 50 — — 1 22 — — 2 80 — — 2 42 — — 3 100 — — 3 52 — — 4 110 — — 4 57 — — 5 116 — — 5 60 — — 6 121 — — 6 62 — — 7 123 — — 7 63 — — a. Fill in the figures for marginal utility and marginal utility per dollar for both movies and books. b. Are these preferences consistent with the law of diminishing marginal utility? Explain briefly. c. Given the budget of $80, what quantity of books and what quantity of movies will maximize Joe’s level of satisfaction? Explain briefly. d. Draw the budget…
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